Life Insurance FAQs - Not Sure You Know Enough About Life Insurance? Learn - Life Insurance Quotes
Common Life Insurance FAQs.
1. What is life insurance? Life insurance is a policy that pays an amount of money to a beneficiary/s upon the death of the insured person. This benefit can be split between 1,2, or 3 people. Some policies can be divided even further to four or more persons. Life insurance proceeds can also be awarded to institutions, charities and organizations.
2. What is a Beneficiary? The beneficiary is the person or organization who will receive the proceeds from the life insurance policy on the death of the insured.
3. What is the Policy? This is the agreement between the insured and the insurer or insurance company. There are many different types of life insurance policies.
4. How do I file a claim? When an insured person passes away you will need to file the claim according to the life insurance policy requirements. As a minimum; a death certificate will be necessary to begin the claims process. In addition to this most insurance companies will have their own claim form that will need to be filled out and signed by the beneficiary. If you can contact an agent that represents the insurance company they should be able to help you through the claims process. If you do not get an answer that you like; continue to look for another agent. Not all agents are equal in professionalism and skill.
5.What is the difference between Whole life insurance and Term Life? Whole life; if paid for exactly as according to the policy language -will last the insureds entire life. Some of these policies endow before death -meaning that the policy will pay the benefit amount to the beneficiary prior to death.
Term life insurance is temporary. It will last only for the length of the term. Term policies are designed to last even beyond the end of the term but the premiums will increase after the term period to unaffordable levels. It is not uncommon for term plans to increase every year after the initial term has expired.
6.Which type of policy is cheaper? A term policy is almost always the cheapest type of life insurance. There can be vast differences between the prices from one company to another so you should get quotes from several companies so that you know you have found a competitive rate. Whole life is usually about twice to three times as expensive as a comparable term policy.
7.What does 10 year, 20 year and 30 year term indicate? This just means that the initial term is that length of time. A 30 year term will provide coverage for the next 30 years of your life. It is usually best to get the maximum term plan for your age and budget as you may need coverage for longer than you initially planned.
8.Which is better -Term or Whole life? There are too many variables to give a blanket answer on this question. However, in general a term plan will be the best type of life insurance for most people. If you have no investments and are not purchasing your own home a whole life plan may fit you better as whole life does build interest and is considered a low yield investment. Again, there is no one right answer. It just depends on what your needs are.
9.What happens to my money? With a basic term life insurance plan if you live past the end of the term your money is gone. It works just like your car insurance policy. It provides the coverage should you die during the term. After the term the coverage is over.
With whole life you have what are called "settlement options". With whole life insurance you can cash out the policy; which would cancel the coverage. You can take a loan against the policy; which will need to be paid back according to the policy. Or you can continue coverage since there is no end or term that applies.